Yusuf says power sector reform in Nigeria is gradual, warning that rising debt, weak governance and tariff gaps make the current path unsustainable

The Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, on Tuesday in Lagos warned that Nigeria’s power sector reform remains a long-term and incremental process rather than a quick fix, citing deep structural and institutional challenges.

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Dr Muda Yusuf said the complexity of the electricity sector, combined with political economy constraints and weak institutions, means progress will continue to be gradual rather than immediate.

The CPPE chief said that without decisive action to address structural inefficiencies, strengthen governance and enforce fiscal discipline, the current power sector reform trajectory would remain unsustainable.

Dr Muda Yusuf noted that despite multiple reform initiatives over the years, the sector continues to struggle with entrenched financial, structural and governance problems that span tariff distortions, weak investor capacity, transmission bottlenecks and a persistent liquidity crisis across the value chain.

He said the inability to implement a fully cost reflective tariff regime, largely due to social and political sensitivities following recent macroeconomic reforms, has deepened subsidy dependence and widened the sector’s financing gap.

According to Dr Muda Yusuf, recent reforms such as foreign exchange unification and fuel subsidy removal have intensified cost of living pressures, increasing resistance to electricity tariff adjustments and further complicating the reform environment.

“However, without cost reflective pricing, the sector is unable to generate sufficient liquidity to sustain operations or attract new investment,” Dr Muda Yusuf said, adding that repeated government intervention has effectively transferred inefficiencies onto the public balance sheet.

He warned that the sector’s rising debt profile, estimated at about N4 trillion, poses a serious fiscal risk and cannot be sustained without deeper structural corrections, improved transparency and credible reform implementation.

Dr Muda Yusuf advocated a balanced approach to power sector reform, combining short term government support with medium to long term structural changes to build a reliable, financially viable and inclusive electricity sector capable of supporting economic growth.

He stressed the need for rigorous verification and auditing of outstanding sector liabilities, warning that subsidy regimes remain vulnerable to abuse without strong oversight and accountability mechanisms.

Drawing parallels with Nigeria’s fuel subsidy experience, Dr Muda Yusuf said the absence of cost reflective tariffs remains one of the most damaging weaknesses in the sector.

He urged the government to adopt a phased and predictable transition towards cost reflective pricing, supported by targeted social protection for vulnerable consumers and stronger governance in subsidy management and debt settlement.

The CPPE chief also highlighted the urgency of reforming electricity distribution by enforcing performance benchmarks for distribution companies, including recapitalisation, technical upgrades and loss reduction.

On transmission, Dr Muda Yusuf called for alternative management or concession models for the Transmission Company of Nigeria to unlock efficiency and investment.

He further canvassed support for decentralisation and renewable energy adoption, saying state level initiatives and independent power projects would help reduce pressure on the national grid.

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Dr Muda Yusuf said government financial support to the sector should be time bound and tied to measurable reform milestones to limit fiscal exposure and restore confidence in Nigeria’s power sector reform process.